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Verizon: No More Grandfathered Unlimited Data Plans

And so ends the age of unlimited mobile data. Today, at an investor’s conference, executive vice president and CFO of Verizon Wireless Fran Shammo announced the company’s plan to get rid of grandfathered unlimited data plans later this summer. Customers who upgrade their phones after the change goes into effect will be put onto a tiered data sharing plan. With Verizon’s announcement, it will only be a matter of time before AT&T follows.

For those unfamiliar with the mobile phone landscape of the United States of America, the majority of the country is dominated by four major carriers: Verizon, AT&T, Sprint, and T-Mobile. A number of smaller carriers like U.S. Cellular exist, but for the most part, these four are the main players. Of the four, Verizon and AT&T are the most popular and capture a large part of the market share. Because of this, the two act as a sort of duopoly that can soft lock consumers to specific carriers beyond a contract. One example of such a mechanism was when tiered data was finally announced by AT&T. Soon after, Verizon announced a similar structure. This made it impossible to switch to another carrier since it would mean forfeiting your unlimited data plan and going to a tiered plan. Both allowed grandfathering of unlimited data plans although AT&T’s CEO recently said he regretted not rolling out tiered data plans when the original iPhone released on its network. With Verizon’s announcement to nix grandfathered unlimited data plans, it should be no surprise when AT&T makes a similar announcement.

I, myself, have a grandfathered unlimited data plan on Verizon with my 4G LTE phone, so this announcement is certainly hitting home. Other friends of mine texted me about this news. Comments in forums have Verizon subscribers looking to jump ship to another carrier. However, should they? Let’s take a look at the current state of mobile data plans.

AT&T: Certainly AT&T is a potential candidate. Their network is already GSM, the standard used by most of the world, and they’ve been investing in a LTE network. However, jumping to AT&T will force you to have tiered data anyway as a new customer. In addition, AT&T’s LTE network is no where close to the size of Verizon’s and there are already complaints about their coverage. It would be a good idea to assess what AT&T’s coverage is in your town and parts of the country you often visit.

Sprint: Another potential candidate. Sprint is currently the only major US carrier that offers “truly” unlimited data since they don’t throttle customers. In addition, Sprint, after the failed investment in WiMax, announced plans to build a LTE network and already has a couple of phones lined up to use the non-existent network (Galaxy Nexus and EVO One 4G LTE). While unlimited data sounds appealing, the biggest problem here is network capacity. If a number of Verizon subscribers jump to Sprint, their network will potentially be overloaded, causing reduced speeds or, even worse, network black outs. Building a larger network will take time and money; money Sprint probably does not have in the short run (especially since getting the iPhone on their network is already a long term investment along with LTE). On the positive note, Sprint’s prices are pretty competitive with T-Mobile. On the other hand, it will be using CDMA until their LTE network is sufficiently built and HD voice is rolled out. Just like with AT&T, coverage will be an issue.

T-Mobile: Probably the carrier with the most price competitive plans. T-Mobile uses GSM although their network frequency is a bit different. Also, T-Mobile may offer “unlimited” data, but it ends up throttling its users after so many GBs are downloaded. While T-Mobile announced plans for a LTE network, the likelihood of them building it to a sufficient level anytime soon is low. Luckily, because AT&T failed to acquire T-Mobile, T-Mobile has some funds to play around with and expand its network. However, considering the price tag of these networks, their new found money will not go very far. It might be possible for T-Mobile to piggyback on AT&T’s future LTE network though. Coverage, even more so than AT&T and Sprint, will be an issue. It’ll be imperative to talk with friends who have T-Mobile in your town to find out what their experiences are before making the jump.

What are my thoughts about the various options? Part of me is leaning towards going to a GSM-based carrier – either AT&T or T-Mobile, but why not stay on Verizon?

Verizon: Yes, Verizon’s plans are expensive. Yes, they’re screwing with their customers. Honestly, this is true for all four carriers. It’s highway robbery; especially with SMS, but that’s another story. Yes, Verizon uses CDMA, which doesn’t work in Europe and other parts of the world. Yes, Verizon’s phone aren’t plug and play like GSM phones. Yes, Verizon screwed up the Nexus. But… Yes, Verizon has the best coverage in the US and will have the biggest LTE network. And yes, Verizon supposedly has the best LTE spectrum (700 mhz). LTE is a GSM-based technology and is being adopted by most of the world. Once voice over LTE is rolled out, later this year or some time in 2013 (a recent report said Verizon was in no rush to bring VoLTE and may delay it to late 2013 or beyond) then CDMA will be a thing of the past. In the longer run, when our friends across the Pacific and Atlantic have LTE networks, Verizon’s phones will be able to play nicely in foreign countries, bringing much needed flexibility.

The grass across the street may look greener NOW, but it may not last long. Of course, there are a lot of variables at play still. Part of me wants the FCC to look closer at mobile data plans and their pricing structure. In the early days of the internet, customers paid for data based on how much they consumed just like how mobile is today. However, we moved away from that and customers mostly pay for how fast the data connection is today. Why aren’t mobile phones moving in that direction? Also, it’s a shame to have such blazing fast data speeds through 4G LTE but not be able to take full advantage of it. LTE just means we’ll be hitting our data cap that much quicker.

Another game changer would be if the FCC forces Verizon or AT&T to share their LTE network with smaller shops like Sprint, T-Mobile, US Cellular, and others. This will make the network coverage issue null and leaves us customers comparing pricing and phones. If something like this did happen, I would probably move to T-Mobile, but who knows what a change like this will do to the smaller carrier’s pricing plans. If the only difference was price, everyone would go to the cheapest carrier.

In conclusion, yes, I am a little bit mad about this change. However, the entire US cell phone landscape will be moving in this direction unless the government steps in. Since no matter where I go, I’ll have to deal with tiered data, I may as well stay where the long term prospects are the greatest. As things stand, I still feel Verizon has the best network for both the long and longer term. Hopefully Verizon adjusts their tiered pricing structure and lowers the cost overall. More recently, new customers could get 4 GB for $30 a month. I’d like to see 4 GB for $5 a month maybe? Okay, maybe I’m being too hopeful. Let’s see what happens.

After note: US carriers are evil. Yup.

Update: Verizon has clarified their position and says this will only affect people who currently have unlimited data and are looking to upgrade their phone on contract. People who buy devices off contract and currently have unlimited data will be able to continue to have it. Hopefully one of Google’s next Nexus devices will be a CDMA/LTE variant for Verizon subscribers looking for a good Android phone off contract.